A Report on Feasibility study of awareness level regarding commodities future trading and to know physical delivery procedure for

chana, tur, turmeric and who can be the major investor.

BY

Adsul Vijay P. (AJ 0566)

Mitcon Institute of Management

Submitted To

Karvy Commodities Broking Ltd, Hyderabad. May- July, 2006

ACKNOWLEDGEMENT
I owe a great deal to MITCON for laying the building blocks of logic and pragmatism in our life. This report, in a way is a reflection of these values. Summer Project provided us with a unique opportunity of working with an organization. I sincerely thank Mr. Anurag Kataria, (Regional manager, Pune Branch) for providing me an opportunity to do a very challenging and satisfying project in an organization like Karvy Comtrade ltd. My heart felt thanks to my project guide Mr. Gaurav P. Lanjekar (Manager, Pune Main) for constant follow-up and valuable suggestions provided throughout. He has always been an ever lasting source of inspiration and guidance. I am also thankful to Mr. Sushil, Mr. Rajesh and other staff members of Karvy comtrade Ltd. with whom I have interacted during the course of the project, for offering their kind cooperation during the course of the project. The report is the result of contributions of numerous people- too many to mention individually, I thank all those numerous who have contributed in their own way in driving this project to success. I also thank all the respondents who have given their valuable time, views and authentic information for this project. I am also grateful to all of them who are directly or indirectly involved in driving this project to a success.

Adsul Vijay P. (AJ 0566)

EXECUTIVE SUMMARY

Title: Feasibility Study Of Amount Of Awareness Regarding Commodities Future Trading And To Know Physical Delivery Procedure For Chana, Tur, Turmeric And Who Can Be The Major Investor.

Organization Reporting officer Faculty guide Students name

: Karvy Commodities Broking Limited. : Mr. Gaurav Lanjekar : Mr. Sanjive kulkarni : Vijay Adsul

OBJECTIVES: - The objectives of the project are: 1. Mapping the amount of awareness regarding commodities future trading. 2. Mapping potential markets for different commodities. 3. To find the flaws in commodities future trading. 4. To find the satisfaction level on online trading among people. 5. To find future prospects of commodities future trading in India. 6. To study the basic framework of commodities future trading. 7. To study the Physical Delivery Procedure For Chana, Tur, Turmeric

SCOPE OF THE STUDY: The entire study was carried out in few selected areas of Pune city for e.g. Hinjewadi, Magarpatta, Market yard, Balewadi, Aundh, FCRoad, Chinchwad, Sinhagad Road, and Swargate etc. 3

METHODOLOGY: In the survey 156 samples were taken. The questionnaire was prepared to find out their interest in commodities and other fields. It also includes about the concept of hedging and the pattern of trading whether they do online trading or offline trading. Survey was conducted in different areas of Pune city like market yard, Hinjewadi, Magarpatta, Aundh, Balewadi, Kothrud, Pune Camp, Chinchwad, Sinhagad Road, Swargate where targeted individuals were Software Engineers, Doctors, C.A., Businessmen, retired persons est.

SOURCES OF DATA: -Data is being collected through a mix of quantitative and qualitative methods. Primary data source-survey of market yard, Survey of Doctors, Software engineers, Hardware engineers, Contractors, Businessmen, C.A., Retired persons. Secondary data source- Internet, books on agricultural marketing, V.S.N.L. Pune dictionary C.D., Database from Karvy office. MAJOR FINDINGS: In the survey it has been found that 44% of the people are investing in equity market, of that only 12% are investing in commodities future market and 13% respondents are investing in mutual fund, 19% respondents are investing in fixed deposit and only 3% respondents are investing in Real Estate, 9% are investing in insurance.

CONCLUSIONS: - The trend of commodities future market is very new to India and it requires a lot of awareness program for the to people come forward for commodity trading RECOMMENDATIONS: Introduction of Commodity Bond. Financial support from banks. Feedback and complaint redressal mechanism. Awareness Building. Minimization of the brokerage charges. 4

Strong security mechanism.

TABLE OF CONTENTS
ACKNOWLEDGEMENT.......................................................................................................................................2 EXECUTIVE SUMMARY......................................................................................................................................3 MAJOR FINDINGS: - ............................................................................................................................................4 TABLE OF CONTENTS.........................................................................................................................................5 INTRODUCTION ...................................................................................................................................................6 Commodities Overview.........................................................................................................................................6 Commodities Market In India...............................................................................................................................7 Why commodities:.................................................................................................................................................8 Capital Market Vs Commodity Market.................................................................................................................9 Challenges for Commodity Exchange:................................................................................................................10 Conclusion:..........................................................................................................................................................11 Project Brief.........................................................................................................................................................11 Research Methodology........................................................................................................................................14 Research objective: .............................................................................................................................................17 Scope of the study:..............................................................................................................................................17 Procedure followed:.............................................................................................................................................19 Limitations of the study:......................................................................................................................................22 KARVY COMTRADE: AN OVERVIEW...........................................................................................................23 About Karvy Group.............................................................................................................................................23 About Karvy Comtrade.......................................................................................................................................24 The Karvy advantage:..........................................................................................................................................24 COMMODITIES OBSERVATIONS...................................................................................................................27 CHANA...............................................................................................................................................................27 TUR.....................................................................................................................................................................41 TURMERIC........................................................................................................................................................56 RESULTS AND FINDINGS.................................................................................................................................67 AGE GROUP OF RESPONDENTS:..................................................................................................................67 INCOME CLASSIFICATION............................................................................................................................69 OCCUPATION...................................................................................................................................................69 GENDER:............................................................................................................................................................71 INVESTMENT:..................................................................................................................................................71 INVESTMENT SUBJECT..................................................................................................................................72 AWARENESS ABOUT KARVY:......................................................................................................................73 OTHERS:............................................................................................................................................................73 SUGGESTIONS AND RECOMMENDATIONS................................................................................................79 BIBLIOGRAPHY..................................................................................................................................................81 Questionnaire..........................................................................................................................................................82

INTRODUCTION

Commodities Overview
Ever since the dawn of civilization commodities trading have become an integral part in the lives of mankind. The very reason for this lies in the fact that commodities represent the fundamental elements of utility for human beings. The term commodity refers to any material, which can be bought and sold. Commodities in a market's context refer to any movable property other than actionable claims, money and securities. Over the years commodities markets have been experiencing tremendous progress, which is evident from the fact that the trade in this segment is standing as the boon for the global economy today. The promising nature of these markets has made them an attractive investment avenue for investors. In the early days people followed a mechanism for trading called Barter System, which involves exchange of goods for goods. This was the first form of trade between individuals. The absence of commonly accepted medium of exchange has initiated the need for Barter System. People used to buy those commodities which they lack and sell those commodities which are in excess with them. The commodities trade is believed to have its genesis in Sumeria.The early commodity contracts were carried out using clay tokens as medium of exchange. Animals are believed to be the first commodities, which were traded, between individuals. The internationalization of commodities trade can be better understood by observing the commodity market integration occurred after the European Voyages of Discovery. The development of international commodities trade is characterized by the increase in volumes of trade across the nations and the convergence and price related to the identical commodities at different markets. The major thrust for the commodities trade was provided by the changes in demand patterns, scarcity and the supply potential both within and across the nations. 6

Commodities Market In India

In India commodity markets have been in existence for decades. However in 1975 the Government banned forward contracts on commodities. Later in 2003 the Government of India again allowed forward contracts in commodities. There have been over 20 exchanges existing for commodities all over the country. Accordingly three exchanges are there which deal in a wide variety of commodities and which allow nation-wide trading. They are Multi Commodity Exchange (MCX) National Commodities Derivatives Exchange (NCDEX) National Multi Commodity Exchange (NMCE) Regulation and Policy issues for Commodity Derivatives in India Commodity derivatives in India have a chequered history. Though the derivative markets survived the prohibition inflicted from time to time, thanks largely to the gray markets, the participants have not been able to shrug off the scare of the markets being banned any time in future. It is not surprising that these markets have not developed as much as the markets in developed countries or even the securities market in our own country. The Exchanges emerging from suffocating environment are crying to breathe in a free and liberal regulatory and policy environment. This article attempts to give an overview of the developments in the commodity derivative markets and tries to explain the rationale for this, what in the present times may perhaps be considered as, obscurantist and retrograde approach, in this era of detailed regulation. 7

Why commodities:
Commodities market essentially represents another kind of organized market just like the stock market and the debt market. However, commodities market, because of its unique nature lends to the benefits of a wide spectrum of people like investors, importers, exporters, producers, corporate etc.

What can commodities market offer?

If you are an investor, commodities futures represent a good form of investment because of the following reasons. High Leverage The margins in the commodity futures market are less than the F&O section of the equity market. Less Manipulations - Commodities markets, as they are governed by international price movements are less prone to rigging or price manipulations. Diversification The returns from commodities market are free from the direct influence of the equity and debt market, which means that they are capable of being used as effective hedging instruments providing better diversification. A Commodity Future Can Help An Exporter Or An Importer In The Following Ways:Hedge against price fluctuations Wide fluctuations in the prices of import or export products can directly affect your bottom-line as the price at which you import/export is fixed before-hand. Commodity futures help you to procure or sell the commodities at a price decided months before the actual transaction, thereby ironing out any change in prices that happen subsequently. A Commodity Future Can Help A Producer In The Following Ways:8

Lock-in the price for your produce If you are a farmer, there is every chance that the price of your produce may come down drastically at the time of harvest. By taking positions in commodity futures you can effectively lock-in the price at which you wish to sell your produce Assured demand Any glut in the market can make you wait unendingly for a buyer. Selling commodity futures contract can give you assured demand at the time of harvest. A Commodity Future Can Help A Large Scale Consumer In The Following Ways:Control your cost If you are an industrialist, the raw material cost dictates the final price of your output. Any sudden rise in the price of raw materials can compel you to pass on the hike to your customers and make your products unattractive in the market. By buying commodity futures, you can fix the price of your raw material. Ensure continuous supply Any shortfall in the supply of raw materials can stall your production and make you default on your sale obligations. You can avoid this risk by buying a commodity futures contract by which you are assured of supply of a fixed quantity of materials at a pre-decided price at the appointed time

Capital Market Vs Commodity Market

Lot of studies has analyzed the performance of capital markets versus commodity markets, across all over the world. Historically, stocks and commodities have been seen to move in opposite directions. But the current times have seen a boom in both capital and commodity markets. The potential catalyst of the commodities boom is the accelerating rate of economic growth, wide growth and increases personal income and spending power, and deficit Economic growth means more production and higher income, which translates into higher demand for virtually all commodities

Commodity Market vs. Capital Market Price changes Price movements Commodity Markets Capital Markets Price movements are purely based Prices movements based on the on the supply and demand. expectation of future performance. Price changes are due to policy Price changes can also be due to changes, changes in tariff and Corporate duties. Price Fluctuation Stock splits. Predictability of future prices is Predictability Failure of Monsoon. actions, Dividend announcements, Bonus shares / of futures

not in control due to factors like performance is reasonably high, which is supplemented by the History Volatility Percentage Returns Initial Margins of management

performance. Lower Higher Gold gives 10-15 % returns on the Returns in the range of 15-20 % on conservative basis. Lower in the range of 4-5-6% annual basis. Higher in the range of 25-40%

Challenges for Commodity Exchange:

Commodity derivatives have achieved one of the fastest growth rates, probably the highest among any other developmental initiatives undertaken either in agricultural sector or in financial sector of a developing economy like India. But certainly this achievement is not just erecting a castle in air. Reasons are deep-rooted. Indian traders have century old experiences in trading commodity derivatives. Compared to the 130 years old stock market, the commodity market is in its nascent stage. It is very much in consensus that by the advent of commodity derivatives trading, a silent revolution is building up in the economy. Though trading volumes in this new market is gradually catching up that in the stock market, yet commodity exchanges are facing challenges that need to be addressed now. 10

Conclusion:
The development of nascent commodity markets is underway and would very soon surpass the matured capital markets. The commodity market is poised to play an important role of price discovery and risk management for the development of agriculture and other sectors in the supply chain. The convergence of India's exchange-traded equity, equity derivatives and commodity derivatives markets would provide an opportunity to serve the larger interests of the economy. The globalization of markets under the WTO regime makes it all the more urgent to develop these markets to enable our economy, especially agriculture, to meet the challenges of new regime and benefit from the opportunities unfolding before us.

Project Brief
In India, people are of different professions like IT professionals, software engineers, doctors, C.A., businessmen, industrialists, agriculture producers and others. But people of each profession dont have options to re-invest their money into the same business. Since inflation of money takes place with time, the value of money decreases with time. Hence people invest their money into the stock market, mutual fund, real estate, insurance etc to get return from the same. But before investing money they have to make a decision on risk management plan. In those fields, people cannot invest for a short period. For getting result they have to wait for a long time. Also risk is very high because money is not invested in diversified way. Also investors are not aware about their up-to-date of money every time. Futures trading perform two important functions of price discovery and price risk management with reference to the given commodity. It is useful to all segments of the economy. In commodities future trading, people can trade for a short period (one, two, and three months). Also investors can diversify their risk by trading in different commodities. Since commodities future trading can be done on online platform, investors are made aware about their up-to-date of money every time. There are some commodities whose price is regulated internationally; hence chances of flaws are very less. . In commodities future trading, hedging is highly beneficial for those who are consumers or producers of inputs. For the industries, who are the major consumers of metals or 11

bullion as raw materials for their production can use the hedging concept. The industry can buy the future contract of metals or, bullion in advance at lower reasonable price and minimize their risk because at the time of consumption of input the price may go higher in spot market. So buying this future contract in advance, the industrialists can minimize their risk. Futures trading are very useful to the exporters as it provides an advance indication of the price likely to prevail and thereby help the exporter in quoting a realistic price and thereby secure export contract in a competitive market. Having entered into an export contract, it enables him to hedge his risk by operating in futures market. But as we know commodities future trading under government regulation came in India in 2003. Hence many people are not aware about it. So here lies the importance of doing survey to make people aware about commodities future trading so that they can get more and more benefit from investment. Agriculture producers and agribusinesses face a diverse array of marketing and production alternatives. Each time a marketing or production decision is made, farmers and agribusinesses must impact this decision will have on their risk management plan. None of these are more difficult to consumer than, what price can I expect? No matter the time of year, this question always looms in farmers or agribusinesses decision processes. At the same time, producers then must ask themselves should I forward price a portion of my crop. Finally in the fall, producers must ask themselves, should I store my crop? As for getting fair price for this crop, a farmer requires a regulated market. So, here lies the importance of studying various grain markets to know their working. At the same time agribusinesses must determine price expectation to know what forward price to offer. For this purpose commodities market provides a mechanism for price discovery on an aggregate level through arbitrage between multiple buyers and sellers. So it is also very important to study future market and its participants, discussing about the participants in traditional grain markets. 12

In short this project deals with mapping the amount of awareness regarding commodities future trading, and then finding the potential areas for different commodities. Also it deals with finding different groups of people that can invest in bullion, energies, metals and agricultural commodities future trading, finding the satisfaction level of online trading among investors. Since futures trading have the risk of being misused by unscrupulous elements, there are also other flaws in commodities future trading which the investors are facing. Hence this project deals with finding of those flaws, study the Physical Delivery Procedure For Chana, Tur, Turmeric, so that we can find out the future scope of the same. Last but not the least it deals with finding the potential areas or market where dealing of specified commodities is done in bulk. Thereby producing turnover of different grain mandies. Also there is price fluctuation in commodities market. So, through this project we are studying what are those demand and supply factors, which affect prices and thereby providing the price ranges, knowing the trading habits of traders and the constraints they are facing (if any).

13

Research Methodology

Design:
The study was conducted in three major part; planning and design of study, survey and data collection finally data analysis and interpretation. The detailed steps are as shown below:

14

Introduction and briefing Problem identification and planning of the study

Research proposal Research proposal was prepared

Exploratory research and secondary data collection Check internal and external sources of data, to help in the preparation of questionnaire

Survey and data collection Data collection from Doctors, Traders, C.A., Engineers, Businessmen and others Data analysis and interpretation

Management dilemma:
The Karvy comtrade is a broking firm. It is working under the platform of MCX and NCDEX. Through Karvy comtrade, agricultural commodities, bullions (gold and silver), metals and energies are traded. Currently annual turnover of commodities market is 30,000cr. Commodities related industries constitute about 58 % of countrys GDP and it is expected to grow at 40 %over 4-5 yrs. So it is very important to explore new avenues. But as we know commodities market is a new sector, a large %of people is still not aware about it. There are some people whom perception about commodity market is bad. A myth about 15

commodity market exist that this market is a source of gambling. Also there is some floss in commodities market, which is severely faced by the client. Due to these problems people are hesitating to invest in commodities market. One major problem of Karvy comtrade is to find the major investors and what are the major areas, which can be potential markets for commodities future trading.

Management question:
What is the awareness regarding commodities market among the people? Who can be major investors in commodities market like agricultural commodities, bullion, metals and energies? What is the scope of future trading in India? What are the new areas in commodities market still to be explored? What are the flaws in commodities market? What is the satisfaction level among people for online future trading?

Research question:
What are the measures that Karvy comtrade should take to encourage people to invest in commodity market? What are the activities that Karvy comtrade should adopt to make people aware about commodity market?

Investigation question:
What are the basic problems that a potential and an existing client is facing? What are the major bottlenecks of commodities market?

16

Research objective:
Mapping the amount of awareness regarding commodities future trading. Mapping potential markets for different commodities. To find different groups of people that can invest in bullion, energies and metals commodities future trading. To find the flaws in commodities future trading. To find the satisfaction level of online trading among people. To device marketing strategy to make future trading in commodities market through Karvy comtrade. To find future prospects of commodities future trading in India. To study the basic framework of commodities future trading. To study the past and present scenario of different commodities.

Scope of the study:

Geographical scope: The entire study was carried out in different areas of Pune city such as: MARKET YARD (APMC), MAGARPATTA, HINJEWADI, FC ROAD, PASHAN, CHINCHWAD, BALEWADI, SINHAGAD ROAD, SWARGATE, AUNDH, KOTHRUD, PUNE CAMP, DECCAN, 17

BHANDARKAR ROAD.

FIGURE: MAP OF PUNE CITY

18

Commodities scope: Study was conducted on all the Agricultural commodities, Bullions, Metals, and Energies.

Procedure followed:
The targeted individuals and groups, for survey the investment awareness program in commodities future trading in bullion, metals, and energies and agricultural commodities are software engineers, doctors, C.A., businessmen, students, retired persons e.t.c. 1. Studying the local grain markets/ agricultural produce marketing committee (APMC) / mandi. This will help in providing: What is the potential in terms of average turnover of commodities market? Who are the major buyers of farmers produce? What is the range of prices i.e. level of price fluctuations in mandi? 2. Profiling of participants of local market. This will tell about: What are the areas of working of participants of local market? 3. Studying the future market. This will help in producing: What is the penetration level of future trading? Who are the major participants and browsing their profile? In which commodity trading is done in bulk? What are the flaws, traders are facing in commodities future trading? What is the satisfaction level of investors for online trading? Doing survey of different software companies (like Infosys, Wipro, Geometric, Cognizant), doctors, C.A., businessmen. This will help in providing 19

What is the average turnover of different professionals? In which sectors they are generally investing? How much percentage of people is aware of commodities future trading? In which commodity investors are investing? What is the satisfaction level of people for online future trading? What are the flaws investors are facing in commodities future trading? Making analysis of participants. This will tell about: What income group of people is investing more in commodities futures trading? In which commodity investors are investing in bulk. People of which occupation investing more in commodities future are trading. SAMPLING PLAN: Table TOTAL NO. OF SAMPLE: 156
OCCUPATION RETIRED CHARTERED ACCOUNTANT BUSINESS MAN HARDWARE ENGINEER MANAGER SOFTWARE ENGINEER SALES OFFICER CONTRACTOR DOCTORS LIC AGENT TRADER NUMBER OF RESPONDENTS 2 26 30 2 11 35 1 1 19 1 26 PERCENT 1 17 19 1 7 23 1 1 12 1 17

20

21

DATA SOURCE: Primary data source: Survey of mandi, Survey of software engineers, Survey of doctors, Survey of C.A., Survey of businessmen and others. Secondary data source: Internet, Books on Agricultural Marketing, V.S.N.L. Pune Dictionary C.D., Database from Karvy office.

Limitations of the study:

Though the present study aims to achieve the above-mentioned objectives in full earnest and accuracy, it may be hampered due to certain limitations. Some limitations of this study are summarized as follows: Potential area is wide but time is very limited. Area of analysis is wide but again time constraints.

22

KARVY COMTRADE: AN OVERVIEW

About Karvy Group

Karvy has traveled the success route, towards building a reputation as an integrated financial services provider, offering a wide spectrum of services for over 20 years. Karvy, a name long committed to service at its best. A fame acquired through the range of corporate and retail services including mutual funds, fixed income, equity investments, insurance etc to name a few. Its values and vision of attaining total competence in our servicing has served as a building block for creating a great financial enterprise. The birth of Karvy was on a modest scale in the year 1982. It began with the vision and enterprise of a small group of practicing Chartered Accountants based in Hyderabad, who founded Karvy. Karvy started with consulting and financial accounting automation, and then carved inroads into the field of Registry and Share Transfers. Since then, it has utilized its quality experience and superlative expertise to go from strength to strength to provide better and new services to the investors. And today, it can look with pride at the fruits of our experience into comprehensive financial services provider in the Country. KARVY Group companies: Karvy Consultants Limited Karvy Stock Broking Limited Karvy Investor Services Limited Karvy Computershare Private Limited 23

Karvy Global Services Limited Karvy Comtrade Limited Karvy Insurance Broking Private Limited Karvy Mutual Fund Services Karvy Securities Limited

About Karvy Comtrade

Karvy Comtrade Limited is another venture of the prestigious Karvy group. With our well established presence in the multifarious facets of the modern Financial services industry from stock broking to registry services, it is indeed a pleasure for us to make foray into the commodities derivatives market which opens yet another door for us to deliver our service to our beloved customers and the investor public at large. The company provides investment, advisory and brokerage services in Indian Commodities Markets. And most importantly, offer a wide reach through their branch network of over 225 branches located across 180 cities. With the high quality infrastructure already in place and a committed Government providing continuous impetus, it is the responsibility of us, the intermediaries to deliver these benefits at the doorsteps of our esteemed customers. With the expertise in financial services, existence across the lengths and breadths of the country and an enviable technological edge, we are all set to bring to you, the pleasure of investing in this burgeoning market, which can touch upon the lives of a vast majority of the population from the farmer to the corporate alike. Karvy is confident that the commodity futures can be a good value addition to your portfolio.

The Karvy advantage:

Trade from anywhere in India 24

Karvy, with its network of branches across the length and breadth of the country, is always within your reach, no matter where you are. This gives you the facility to trade

Reliable Research Karvy has a dedicated team of research analysts who work round the clock to provide the best research newsletters and advices. We reach your desk daily, weekly and monthly. Personalized Services Karvy, with its wide array of personalized services from registry to stock broking takes the pleasure of adding one more service, commodities broking with the same personal touch.

State of the art infrastructure The strong IT backbone of Karvy helps us to provide customized direct services through our back office system, nation-wide connectivity and website.

Round the clock operations in commodities market Indian commodities market, unlike stock market keeps awake till 11 in the night and Karvy is all poised to offer round the clock services through its dedicated team of professionals.

25

26

COMMODITIES OBSERVATIONS
CHANA

Profile:
Chana belongs to leguminasae family and there are two main types - Desi and Kabuli. A Desi chickpea is the main type grown in India. India's chana production fluctuates between 4-7 million tons and is normally 40% of India's total pulse production of 12-15 million tons India's chana production in 2003-04, chana production is 5.33 million tons out of a total pulse production of 15.23 million tons. The major producing states are Madhya Pradesh (1.5-2.5 million tons, Uttar Pradesh (0.70.85 million tons), Rajasthan (0.5-2.5 million tons) and Maharashtra (0.5-0.7 million tons). Chana is a rabi crop and is shown from nov. to December and harvested from Feb to March. The peak arrival period begins from March-April at the major trading centers of the country. India accounts for 2/3rd of the world's chickpea production. India imports around 3-4 lakh tons of chickpeas annually. The major country from where India imports chickpeas is Canada, Australia, Iran and Myanmar. Indian chana markets are highly fragmented, with very long value chain. The major players in the value chain are commission agents, brokers, stockiest, wholesale traders, dal mills, wholesalers (dal) and retail outlets. The information flow between these participants is restricted and very slow. Major Trading Centers Indore, Bhopal, Vidisha in Madhya Pradesh 27

Jalgaon, Latur, Mumbai, Akola in Maharashtra Jaipur, Bikaner, Kota, Jodhpur, Sriganaganagar, Hanumangarh in Rajasthan Other major centers are Delhi, Chennai, Kanpur, Hapur, Hyderabad, Vijayawada, Gulbarga, Sirsa, Jalandhar, Ludhiana, Sangrur Market Influencing Factors Chana can withstand moisture stress to a certain extent. However, the production highly fluctuates between years, depending on the rains received and the moisture availability in the soil. The sentiments of traders play a significant role currently, as a consequence of the lack of free-flow of information. Stocks present with stockiest and the stocks-to-consumption ratio. Imports and the crop situation in the countries from where imports originate, viz., Canada, Australia, Myanmar. There is high substitutability between pulses in India among the consumers. So the prices of other major pulses like tur, yellow peas, green peas etc also influence the prices of chana.

Contract Specification of Chana

Type of contract Futures Contract Specifications Name of commodity Chana Unit of trading 10 MT Delivery Unit 28

10 MT Quotation/Base Value Rs. Per Quintal Tick size Re 1 Quality specification Rajasthan Desi The material should be free of Mathara and Khesari and live infestation Foreign Matter-1% max Green, Immature, Shrunken, Shrivelled Seeds- 3% Brokens, Splits- 2% Damaged and Weeviled- 3% (Weeviled 2%) Moisture- 10% Other Varieties- 1% Max MP Kantawalla The material should be free of Mathara and Khesari and live infestation Foreign Matter-1% max Green, Immature, Shrunken, Shrivelled Seeds-3% Broken, Splits- 3 % Damaged and Weeviled- 3% (Weeviled max 2%) Moisture- 10% Other Varieties- 1% Max Quantity Variation +/-5%. Corresponding rates will be applicable if within the permissible variations. Delivery centre Rajasthan Desi, MP Desi Delhi 29

Also deliverable MP Kantawalla Indore

30

Hours of Trading As per directions of the Forward Markets Commission from time to time Mondays through Fridays 10:00 AM to 05:00 PM Saturdays 10.00 AM to 2.00 PM The Exchange may vary the above timing with due notice. Due date/Expiry date 20th day of the delivery month If 20th happens to be a holiday, a Saturday or Sunday then the due date shall be the immediately preceding trading day of the exchange. Delivery specification Upon expiry of the contracts, if any seller with open position desires to give delivery at a particular delivery center, then the corresponding buyer with open position as matched by the process put in place by the Exchange shall be bound to settle by taking physical delivery Closing of contract All open positions will be settled as per general rules and product specific regulations Opening of contracts The first set of contracts will be launched on October 21,2004. Subsequently trading in any contract month will open on the 21st day of the month. If 21st happens to be a non-trading day, contracts would open on the next trading day. 31

No. of active contracts Minimum 2 contracts with a Maximum of 12 contracts running concurrently Price band Limit of 10 percent of the last traded price of previous trading day or as approved by the Relevant Authority of the Exchange from time to time Position limits Member-wise: Rs.20 crores or 15% of open interest, whichever is higher Client-Wise:Rs.10 crores or 10% of open interest, whichever is higher Premium/ Discount Rajasthan Desi Green, Immature, Shriveled Seeds Up to 3% acceptable with no rebate >3% to 4% on 50% rebate accepted Above 4% rejected Broken, Splits Up to 2% acceptable with no rebate >2 % to 3% on 50% rebate accepted Above 3% rejected Moisture Up to 10% acceptable with no rebate >10 % to 12% on 100% rebate accepted Above 12% rejected Damaged, Weeviled Seeds Up to 3% with no more than 2% Weeviled acceptable, with no rebate >3%-10% on 50% rebate acceptable 32

Above 10% rejected MP Kantawala Green, Immature, Shriveled Seeds Up to 3% acceptable with no rebate >3% to 4% on 50% rebate accepted Above 4% rejected Broken, Splits Up to 3% acceptable with no rebate >3 % to 5% on 50% rebate accepted Above 5% rejected Moisture Up to 10% acceptable with no rebate >10 % to 12% on 100% rebate accepted Above 12% rejected Damaged, Weevilved Seeds Up to 3% with no more than 2% Weeviled, acceptable with no rebate >3%-10% on 50% rebate accepted Above 10% rejected

Particulars Designated Warehouse Address

Contact person Name Contact number Email ID

Delhi / New Delhi CWC Delhi Central Warehouse, G.T Karnal Road, Opp S.B.I Colony, Ranapratab Buag, Delhi -33, Mr. D.P Singh, 27125151 cwcdli@hub.nic.in

Sohanlal & Co. C - 28, Lawrence Road, Industrial Area, New Delhi- 1100035, Mr. Sandeep Sabharwal, 011-27182517, 011-27102468/00, sssumia@rediffmail.com

33

Storage charges (Per Month) Fumigation charges Insurance charges Indicative Loading charges Indicative Unloading charges Designated Quality Certifying Agency Quality Certification charges Validity

Rs.8.10 per bag of 100 kg Included in storage charges Rs. 50.00 per lac per month Rs. 1.50 per bag Rs. 1.50 per bag CWC Delhi Included in the storage charges Three months

Rs. 7.00 per bag of 100 kg Rs. 2.00 bimonthly Rs. 35.65 per lac per month Rs. 1.55 per bag Rs. 1.55 per bag Dr Amin Superintendents & surveyors Pvt Ltd Rs. 750.00 Per 10 MT + Govt.Service Tax @10.2 % One month

DELIVERY PROCEDURES
Unit of Delivery The unit of delivery for Chana shall be 10MT. Delivery Size Delivery is to be offered and accepted in lots of 10MT Net or multiples there of. A quantity variation of +/- 5% is permitted as per contract specification. Delivery Requests The procedure for Chana delivery is based on the contract specifications I. During three trading days prior to expiry of the contract (including the date of expiry), sellers having open positions would be required to indicate delivery information for giving delivery. NCDEX would thereafter complete the matching process based on the location and by random, keeping in view the storage capacity of warehouse and Chana 34

already deposited / dematerialized for delivery or any other factor(s) that the Exchange deems appropriate for completion of the matching process. It may be noted that upon expiry of the contract, if any seller having open position desires to give physical delivery at a specified delivery center, then the buyer with corresponding open position as matched by the process put in place by the Exchange, shall be bound to settle by taking physical delivery. All open positions of those sellers who do not provide required information for physical delivery shall be settled in cash with penalties. For Chana, currently, the applicable penalty is 0.5% of the Final Settlement Price (FSP). Delivery Allocation The Exchange would then compile delivery requests received from members on the last trading day,. The buyers / sellers who have to receive /give delivery would be notified on the same day after the close of trading hours. Delivery of Chana is to be accepted by buyers at the accredited warehouse where the seller affects delivery in accordance with the contract specifications. Actual Delivery Where Chana is sold for delivery in a specified month, the seller must have requisite electronic credit of such Chana holding in his Clearing Members Pool Account before the scheduled date of pay in. On settlement the buyers Clearing Members Pool Account would be credited with the said delivery quantity on pay out. The Clearing Member is expected to transfer the same to the buyers depository account. However, the buyer must take actual physical delivery of Chana before expiry of the validity date as indicated in the quality test report/Assayers Certificate of the Assayer or gets the same revalidated. The contents of this product note are subject to Rules, Byelaws and Regulations of NCDEX as in force from time to time and are read There with. Accredited Warehouse 35

NCDEX has accredited warehouses for receipt and delivery of Chana. Chana will be received and delivered only from the NCDEX accredited warehouse. The Chana received at the NCDEX accredited warehouse will be tested and certified by NCDEX accredited Assayer before acceptance as good delivery in the warehouse. Likewise, Chana delivered to buyers will be from the accredited warehouse only. Quality Standards The contract quality for delivery of Chana futures contracts made under NCDEX Regulations shall be Chana conforming to the quality specification indicated in the contract. No lower grade/quality shall be accepted in satisfaction of futures contracts for delivery except as and to the extent provided in the contract specifications. Delivery of higher grade would be accepted without premium. Packaging Chana should be in standard bags of 100 Kg only (Gross weight) if delivered at the accredited warehouse at New Delhi and in standard bags of 90 Kg only (Gross weight) if delivered at accredited warehouse at Indore. Chana delivered shall be packed in clean, dry, sound, single / once used, new B-Twill bags in merchantable condition and or any other accepted industry standard material with the mouth of the bag stitched disallowing sweating / spilling. Standard Allowances Sample weight per validation of quality allowed will be 0.20% on account of sample testing. At the time of deposit The quantity credited will be the actual quantity delivered at the tested moisture level, after providing for standard allowances on account of sampling. At the time of withdrawal / revalidation 36

The weight of lot delivered / revalidated at the time of withdrawal / revalidation shall be adjusted to moisture level at the time of deposit / revalidation whichever is later and such adjustment shall be over and above the standard allowances mentioned above. Weight The quantity of Chana received and / or delivered at the NCDEX designated warehouse would be determined / calculated by the weighbridge / weigh scale at the premises of the designated warehouse and the quantity so determined would be binding on all parties. The weight of the bag will be 100 kg Gross. Chana Sampling The sampling will be done with 5% of Chana. Out of every lot, 100 bags will be randomly selected & out of these bags any 20 bags will be taken, samples will be drawn from 3 places of each bag and a composite mixture of 2 kgs will be made. This is then divided into 4 parts These samples will be distributed as under: - One sample to Depositor - One sample to Warehouse owner - One sample for Analysis by assayer - One sample for record with assayer Accredited Assayer NCDEX has approved the Assayer for quality testing and certification of Chana received at the designated warehouse. The quality testing and certification of Chana will be undertaken only by the approved Assayer. Quality Testing Report The test report issued by the Chana testing laboratory on the samples drawn shall be acceptable and binding on all parties. 37

Testing Procedure Testing for Chana will be done both physically and chemically. To test Green-ImmShrivelled Seeds, Broken Splits and Damaged-Weeviled physical tests are conducted. For Moisture, chemical test is done by oven dry method. Assayer Certificate Testing and quality certificate issued by NCDEX approved Assayer for Chana delivered at designated warehouse in Delhi and at such other locations announced by the Exchange from time to time shall be acceptable and binding on all parties. Each delivery of Chana at the warehouse must be accompanied by a certificate from NCDEX approved Assayer. Validity period The validity period of the Assayers Certificate for Chana is 2 months or till the first withdrawal from the warehouse whichever is earlier. Revalidation will be for 1 month each for two revalidations. Electronic transfer Any buyer or seller receiving and or effecting Chana would have to open a depository account with an NCDEX empanelled Depository Participant (DP) to hold the Chana in electronic form. On settlement, the buyers account with the DP would be credited with the quantity of Chana received and the corresponding sellers account would be debited. The Buyer wanting to take physical delivery of the Chana holding has to make a request in prescribed form to his DP with whom depository account has been opened. The DP would route the request to the warehouse for issue of the physical commodity i.e. Chana to the buyer and debit his account, thus reducing the electronic balance to the extent of Chana so rematerialized. Charges 38

All charges and costs payable at the designated warehouse towards delivery of Chana including sampling, grading, weighing, handling charges, storage etc. from the date of receipt into designated warehouse upto date of pay in & settlement shall be paid by the seller. No refund for warehouse charges paid by the seller for full validity period shall be given to the seller or buyer for delivery earlier than the validity period. All charges and costs associated & including storage, handling etc. after the pay out shall be borne by the buyer. Warehouse storage charges will be charged to the member / client by the respective Depository Participant. The Assayer charges for testing and quality certification should be paid to the Assayer directly at the delivery location either by cash / cheque / demand drafts. Duties & levies All duties, levies etc. up to the point of sale will have to be fully borne by the seller and shall be paid to the concerned authority. All related documentation should be completed before delivery of Chana into the NCDEX accredited warehouse. Stamp Duty Stamp duty is payable on all contract notes issued as may be applicable in the State from where the contract note is issued or State in which such contract note is received by the client. Taxes Service tax Service tax will be payable by the members of Commodity Exchanges on the gross amount charged by them from their clients on account of dealing in commodities. Sales Tax / VAT Local taxes/ VAT wherever applicable is to be paid by the seller to the sales tax/VAT 39

authorities on all contracts resulting in delivery. Accordingly the buyer will have to pay the taxes/VAT to the seller at the time of settlement. Members and / or their constituents requiring to receive or deliver Chana should register with the relevant tax/VAT authorities of the place where the delivery is proposed to be received / given. In the event of sales tax exemption, such exemption certificate should be submitted before settlement of the obligation. There will be no exemptions on account of resale or second sale in VAT regime.

40

TUR

Profile
India's tur production fluctuates between 2.5-3 million tons and is normally 20% of India's total pulse production of 12-15 million tons. India's tur production in 2003-04 is 2.43 million tons out of a total pulse production of 15.23 million tons. The major producing states are Maharashtra (0.7-0.9 million tons), Uttar Pradesh (0.5-0.6 million tons), Karnataka (0.3 million tons), Madhya Pradesh (0.3 million tons), Uttar Pradesh (0.7-0.85 million tons) and Gujarat (0.1-3 million tons). Tur is mainly a khariff crop and is cultivated from June-July to September-October. The peak arrival period begins from October at the major trading centers of the country. India accounts for more than 80% of the world's tur/pegion peas production. India imports around 4-5 lakh tons of tur annually. The major country from where India imports tur is Myanmar. Indian tur markets are highly fragmented, with very long value chain. The major players in the value chain are commission agents, brokers, stockists, wholesale traders, dal mills, wholesalers (dal) and retail outlets. The information flow between these participants is restricted and very slow. Major Trading Centres Indore, Bhopal, Vidisha in Madhya Pradesh Jalgaon, Latur, Mumbai, Akola in Maharashtra Other major centers are are Delhi, Chennai, Kanpur, Hapur, Hyderabad, Vijayawada, Gulbarga, Sirsa, Jalandhar, Ludhiana, Sangrur Market Influencing Factors

41

Weather plays a profound influence in determining the traders sentiments and the production. This has an influence on prices. The sentiments of traders play a significant role currently, as a consequence of the lack of free-flow of information. Stocks present with stockiest and the stocks-to-consumption ratio. Imports and the crop situation in the countries from where imports originate, viz., Myanmar The price of other major pulses like chana, urad, yellow peas, green peas etc also influence the prices of tur

Contract Specification
Type of contract Futures Contract Name of commodity Maharashtra Lal Tur Unit of trading 10 MT (10 MT = 10,000 Kgs) Delivery unit 10 MT (10 MT = 10,000 Kgs) gross to net 50 Kgs/100 Kgs packed in single/double PP or jute bags. Quotation/ Base value Rs per quintal Tick size 42

Re. 1 Quality specification Maharashtra Lal Tur with the following specifications: Foreign matter (includes dust, sanded other admixtures) 2% max Kachri - Damaged otherwise (including immature, shriveled, heated fungi and discolored grains), Broken 10% max Weeviled Seeds 3% max Retention on 4 mm sieve 2% max Red Seeds 95% min Moisture 14% max Crop year Current The material will be tested on 4 mm sieve. The material should be free of live infestation Quantity variation +/- 3%, Corresponding rates will be applicable, if within the permissible limits Delivery center Akola Hours of Trading As per directions of the Forward Markets Commission from time to time, currently (with effect from April 25, 2005). Mondays through Fridays 10:00 a. m. to 05:00 p.m. 43

Saturdays: 10.00 a.m. to 2.00 p.m. The Exchange may vary the above timing with due notice. Delivery specification Upon expiry of the contracts, if any seller with open position desires to give delivery at a particular delivery center, then the corresponding buyer with open position as matched by the process put in place by the Exchange shall be bound to settle by taking physical delivery No. of active contracts Minimum 2 contracts and maximum 12 contracts running concurrently Opening of contracts first set of contracts has been launched on Friday, April 8, 2005.Subsequently, trading in any contract month will open on the 21st day of the month. If the 21st day The happens to be a non-trading day, contracts would open on the next trading day Due date/Expiry date 20th day of the delivery month If 20th happens to be a holiday, a Saturday or a Sunday then the due date shall be the immediately preceding trading day of the Exchange Closing of contract All open positions will be settled as per general rules and product specific regulations Price band Limit of 5% Position limits Member-wise: 6,250 contracts (62,500 MT) Client-wise: 1,250 contracts (12,500 MT) 44

Special margins Special Margin of 4% of the value of the contract whenever the rise or fall in price from the first day's closing price of 20% payable by buy or seller depending on whether prices rise or falls respectively.

Lemon Tur Contract Specification Type of contract Futures Contract Name of commodity Lemon Tur Unit of trading 10 MT (10 MT = 10,000 Kgs) Delivery unit 10 MT (10 MT = 10,000 Kgs) gross to net 50 kgs packed in single/double PP or jute bags Quotation/ Base value Rs per quintal Tick size Re. 1

Quality specification Myanmar Origin Lemon Tur with the following specifications: Foreign matter (includes dust, sand and other admixtures) 2% max 45

Damaged otherwise (including immature, shriveled, heated fungi and discolored grains), Broken and Weeviled Seeds 10% max Crop year Current The material will be tested on 3mm sieve. Quantity variation +/- 3%. Corresponding rates will be applicable, if within the permissible limits Delivery center Mumbai Hours of Trading Mondays through Fridays: 10:00 a. m. to 05:00 p.m. Saturdays: 10.00 a.m. to 2.00 p.m. The Exchange may vary the above timing with due notice. Delivery specification Upon expiry of the contracts, if any seller with open position desires to give delivery at a particular delivery center, then the corresponding buyer with open position as matched by the process put in place by the Exchange shall be bound to settle by taking physical delivery No. of active contracts Minimum 2 contracts and maximum 12 contracts running concurrently Opening of contracts The first set of contracts has been launched on Friday, April 8, 2005 Subsequently; trading in any contract month will open on the 21st day of the month. If the 21st day happens to be a nontrading day, contracts would open on the next trading day 46

Due date/Expiry date 20th day of the delivery month If 20th happens to be a holiday, a Saturday or a Sunday then the due date shall be the immediately preceding trading day of the Exchange Closing of contract All open positions will be settled as per general rules and product specific regulations Price band Limit of 5% Position limits Member-wise: 6,250 contracts (62,500 MT) Client-wise: 1,250 contracts (12,500 MT) Special margins Special margin of 4% of the value of the contract whenever the rise or fall in price from the first day's closing price of 20% payable by buyer or seller depending on whether prices rise or falls respectively. Particulars Warehouse Address Mumbai (Vashi) CWC- Navi Mumbai Warehouse Manager, Central Warehouse, VashiI, Opp. Rallies India Ltd, Turbhe Store, Sector-20, Vashi, Navi Mumbai - 400 613. Mumbai (Reay Road) CWC - Mumbai Reay Road Warehouse Manager, Central Warehouse, M.S. Jetha, Multistroyed, Bldg.No. G125/129, Cotton Avenue, Near Reay Road Station, East. Mumbai 400 033. Mrs. S.V. Mumbai (Wadala) B-Mall Mumbai L. M. Nadkarni Marg, near M.P.T. Hospital, Wadala (E) Mumbai400037,

Contact person

Mr. V.K Saxena 47

Mr. Vasu

Contact numbers Storage charges (Per Month) Fumigation charges Insurance charges Indicative Loading charges Unloading Designated Quality Certifying Agency. Quality C charges

27845112, Rs. 4.55 per bag of 50 kg Re. 1.00 per bag Rs. 50.00 per lac per month Rs. 2.00 Per bag Rs. 2.00 Per bag CWC- Navi Mumbai Included in storage charges Three months

Dharankar, 23728936. Mob: 9819696363 Rs. 4.55 per bag of 50 kg Re. 1.00 per bag Rs. 50.00 per lac per month Rs. 3.00 Per bag Rs. 3.00 Per bag CWC - Mumbai Included in storage charges Three months

022-56640000 Fax - 02256574109 Rs. 5.00 per bag of 50 kg Rs. 2.00 per Qtl (Bimonthly) Rs. 35.65 per lac per month Rs. 3.00 Per bag Rs. 3.00 Per bag Dr Amin Superintendents & surveyors Pvt Ltd Rs. 500.00 Per 10 MT + Service Tax @10.2 % One month and 15 Days

Validity

48

Delivery Procedures

Unit of Delivery The minimum unit of delivery for Tur shall be 10 MT. Delivery Size Delivery is to be offered and accepted in lots of 10 Metric Tons Gross or multiples There of. A Quantity variation of +/- 3% with applicable rates is available as per contract Specifications. Quality Standards The contract grade for delivery of Tur futures contracts made under NCDEX Regulations shall be Tur conforming to the quality specification indicated. No lower grade/quality below the stated specifications shall be accepted in satisfaction of futures contract delivery except as provided in the contract specifications. Accredited Warehouse NCDEX has accredited warehouse for receipt and delivery of Tur. Receipt and delivery of Tur will be undertaken only from the accredited warehouse. Tur Delivery The delivery of Tur is effected by sellers providing delivery information to the Exchange during trading hours on the last three trading days prior to the expiration of the contract (including the date of expiry) and unto 5.00 PM on the day of expiry of the contract through the delivery request window in NCDEX Trading Terminal. The Tur received at the warehouse will be tested and certified by NCDEX appointed Assayer before acceptance as good delivery in the warehouse. Likewise, Tur delivered to buyers will be from the accredited warehouse only. 49

Packaging Lemon Tur Delivered shall be packed in single/double PP bags or jute bags at 50 kilograms Gross. Maharashtra Lal Tur Delivered shall be packed in single/double PP bags or jute bags at 50 Kilograms and 100 Kilograms Gross. Standard Allowances The standard allowances towards loss arising on account of sample weight per validation of quality and spillage shall be unto 0.20% of each lot delivered/revalidated. At the time of deposit: The quantity credited will be adjusted to the base moisture level at which the contract is been in trade after allowing for standard allowances on account of spillage and sampling. At the time of withdrawal/revalidation: The weight of lot delivered / revalidated at the time of withdrawal/revalidation shall be adjusted to the base moisture level at which the contract is been traded. Good/Bad Delivery Norms Tur delivery into NCDEX designated warehouse would constitute either good delivery or bad delivery based on the good / bad delivery norms. Approved Assayer NCDEX has approved Assayer for quality testing and certification of Tur received at the accredited warehouse. The quality testing and certification of Tur will be undertaken only by such approved Assayer. 50

Assayer Certificate Testing and quality certificate issued by NCDEX approved Assayer for Tur delivered at designated warehouse in Mumbai shall be acceptable and binding on all parties. Each delivery of Tur at the warehouse must be accompanied by a certificate from NCDEX approved assayer. Tur Sampling Tur samples shall be drawn by NCDEX approved Assayer at the time of delivery / storage at the accredited warehouse. The samples drawn will be from 10% of bags selected randomly from different quarters of packaged bags from each lot of 10 MT. The sample from each bag is composited and then reduced to 1.5 to 2.0 Kg by quartering and coning method. The sample portions drawn will be packed in clean, dry containers or plastic sachets and shall be marked to recognize NCDEX member identity, quantity, date, time etc. Samples drawn will be equated into four parts. One part will be utilized for testing and certification by the Assayer. The second part will be retained by the Assayer. The third part will be retained as NCDEX referee sample and the fourth part will be given to the depositor. from each truck and tested truck wise for the defined quality parameters. All the trucks pertaining to the same party and delivered on the same day will have to be stacked together at the warehouse. The assayer will arrange for the weighted average value for the entire lot (by combining the values arrived on basis of truck wise sampling and testing) stacked together and arrive at the single value and see whether it meets the contract specs. If weighted average value meets the norms the entire lot will be accepted. If the weighted average value does not meet the permitted quality, the entire lot (including the trucks with accepted quality parameters forming part of that lot) will be rejected and the depositor will be asked to take out goods by the warehouse since there is no provision for acceptance of partial lots. It may be noted that only those lots which are stacked together for the party can be combined for arriving at weighted average value as aforesaid. Example: if two lots are delivered on the same day but they could not combine the stacks (due to time difference between the deliveries of lots within the same day) then both the lots are treated separately and average values for each lot will be assessed. 51

52

Weight The quantities of Tur received at the NCDEX accredited warehouse would be determined /calculated by the weighbridge/weigh scale at the premises of such warehouse or at the weighbridge recognized by such warehouse and the quantity so determined would be binding on all parties. Testing Procedure The Tur samples collected will be tested as per standard test methods prescribed in ISI IS 4333. From the sample size by the method of quartering and coning technique, about 100 gms would be checked for all the refractions as well as foreign matter, degree of damage, weeviled, admixture and moisture. Validity Period The validity period for Tur would be 2 month or till the first withdrawal from the warehouse whichever is earlier. Thereafter only two revalidations of one month each shall be allowed. Electronic Transfer Any buyer or seller receiving and or effecting Tur delivery would have to open a depository account with an NCDEX empanelled Depository Participant (DP) to hold the Tur in electronic form. On settlement, the buyers account with the DP would be credited with the quantity of Tur received and the corresponding sellers account would be debited. The Buyer wanting to take physical delivery of the Tur holding has to make a request in the prescribed form to his DP, with whom depository account has been opened. The DP would route the request to the warehouse who would issue the physical commodity i.e.: Tur to the buyer and debit his account, thus reducing the electronic balance to the extent of Tur rematerialized. Delivery Allocation 53

The Exchange would compile delivery information received from the selling members on the last trading day, i.e. 20th of the month or such other day as specified in Chapter I above. The buyers who have to receive delivery would be notified on the same day after the close of trading hours. Delivery of Tur is to be accepted by buyers at the accredited warehouse where the seller affects delivery in accordance with the contract specifications. Actual Delivery Where Tur is sold for delivery in a specified month, the seller must have requisite electronic credit of such Tur holding in his Clearing Members Pool Account before the scheduled date of pay in. On settlement, the buyers Clearing Member Pool Account would be credited with the said delivery quantity after pay out. The clearing member is expected to transfer the same to the buyers depository account. However, the buyer must take actual physical delivery of Tur before expiry of the validity date as indicated in the quality test report/Assayers Certificate of the Assayer or gets the same revalidated .

Charges All charges and costs payable to the designated warehouse towards delivery of Tur including sampling, grading, weighing, handling charges, storage etc. from the date of receipt into designated warehouse unto date of pay in & settlement shall be paid by the seller. All charges and costs after the pay out shall be borne by the buyer. Warehouse storage charges will be charged to the member client by the respective Depository Participant. The Assayer charges for testing and quality certification should be paid to the Assayer directly at the delivery location either by cash / cheque / demand draft. Duties & Levies All duties, levies etc. up to the point of sale will have to be fully paid by the seller and shall be paid to the concerned authority. All related documentation should be fully complied with and completed before delivery of Tur into the NCDEX accredited 54

warehouse. Stamp duty Stamp duty is payable on all contract notes issued as may be applicable in the State from where the contract note is issued or as per the Stamp Act of the State in which such contract note is received by the client if the client is located in other State. Taxes
Sales Tax / Value Added Tax (VAT)

Local sales tax/VAT wherever applicable is to be paid by seller to the Sales Tax/VAT authorities on all contracts resulting in delivery. Members and / or their constituents requiring receiving or delivering Tur should register with the relevant sales tax/VAT authorities of the place where the delivery is proposed to be received / given. In the event of sales tax exemption, such exemption certificate should be submitted before settlement of the obligation. There will be no exemptions on account of resale or second sale in VAT regime. Service Tax Service tax will be payable by the members of commodity Exchanges on the gross amount charged by them from their clients on account of dealing in commodities.

Premium/Discount
Tur conforming to contract specification and delivered to NCDEX designated warehouse will be tested for quality and stored. No premium/ discount is applicable on account of quality specification variations for Tur delivered to NCDEX designated warehouse.

55

TURMERIC

Profile:
CONTRACT SPECIFICATIONS OF TURMERIC
Name of commodity Turmeric Hours of Trading As per directions of the Forward Markets Commission Mondays through Fridays: 10:00 AM to 05:00 PM Saturdays: 10.00 AM to 2.00 PM The Exchange may vary the above timing with due notice. Unit of trading 10 MT Delivery Unit 10 MT Quotation/Base Value Rs. per Quintal Tick size Re. 1 Daily Price fluctuation limit Daily limit of 6% provided that there shall be provided of cooling off 15 minutes after the trade hits the prescribed daily price limit. Thereafter the price band shall be raised another 50% of 56

the existing limit and trade will be resumed. If the price hits the revised price band again during the day, no trade/order shall be permitted beyond the revised limit during the day

57

Quality specification Unpolished turmeric fingers Inferior quality Turmeric* should not be more than 1.5%
Fingers that are broken/those less than 15mm should not be more than 3.0% Damage due to moisture (i.e. Lokhandi) or over boiling (i.e. Kadh) should not be more than

0.3%
Unboiled or less boiled turmeric should not be more than 0.4% Busha, chaff dirt, earth clods and stones should not be more than 0.75% Bulbs should not be more than 2% Moisture should not be more than 10%

Turmeric should be free from fungus

Turmeric should not be artificially colored with dyes or chemicals

Quantity variation +/- 2% No. of active contracts Maximum 12 monthly or minimum 2 monthly contracts running concurrently Delivery Center Warehouses notified by Exchange in Nizamabad, Sangli and Erode Delivery Upon expiry of the contracts, if any Seller with open position desires to give delivery at a particular delivery center, then the corresponding Buyer with open position as matched by the process put in place by the Exchange shall be bound to settle by taking physical delivery Opening of contracts Trading in any contract month will open on the 10th day of the month. If 10th happens to be a non-trading day, contracts would open on the next trading day Due date 20th day of the delivery month. If 20th happens to be a holiday, then previous trading day. If 20th happens to be a Saturday or Sunday then the due date shall be the immediately last preceding trading day of the Exchange Position limits 58

Member: 20,000 MT for all contracts or 20% of market wide open position whichever is higher. Client: 5,000 MT for all contracts The above limit will not apply to bona fide hedgers Premium / Discount As are to be notified by the Exchange prior to launch of the contracts Closing of contract On the expiry of the contract, all outstanding positions not resulting in giving/taking of physical delivery of commodity shall be closed out at the Final Settlement Price announced by the Exchange. Particulars Designated Warehouse Address Nizamabad CWC Nizamabad Central Warehouse, Subhash Nagar,Near Mandi, Nizamabad 503 002, Mr. K.R.S. Reddy, 08462-220651 Rs.3.80 per bag of 70 kg Included in storage charges Rs. 50.00 per lac per month Rs. 3.00 Per bag Rs. 3.00 Per bag CWC Erode CWC - Erode Warehouse Manager, Central Warehouse, Bhawani Road, Erode - 638 004 Tamilnadu Duggirala CWC Duggirala Warehouse Manager, Central Warehouse, Eail yeth, Duggirala, Guntur District 522330. Mr. G. S.V. Prasad 08644 277276 Rs.3.45 per bag of 70 kg Included in storage charges Rs. 50.00 per lac per month Rs. 5.00 Per bag Rs. 5.00 Per bag CWC - Erode Sangli CWC- Sangli Warehouse Manager, Central Warehouse, Market Yard, Sangli. - 416416

Contact person Contact number Storage charges (Per Month) Fumigation charges Insurance charges Indicative Loading charges Indicative Unloading charges Designated

Mr. Bashir Ahmed 0424 2211023 Rs.3.45 per bag of 70 kg Included in storage charges Rs. 50.00 per lac per month Rs. 3.00 Per bag Rs. 3.00 Per bag CWC - Erode 59

Mr. S. G. Erandale 0233 2670375 Rs.3.45 per bag of 70 kg Included in storage charges Rs. 50.00 per lac per month Rs. 3.00 Per bag Rs. 3.00 Per bag CWC- Sangli

Quality Certifying Agency Quality Certification charges Validity

Nizamabad Included in storage charge Three months Included in storage charge Three months Included in storage charge Three months Included in storage charge Three months

DELIVERY PROCEDURES Unit of Delivery

The minimum unit of delivery for Turmeric shall be 10 MT.

Delivery Size
Delivery is to be offered and accepted in lots of 10 MT (Net) or multiples thereof. A quantity variation of +/- 2% is permitted as per contract specification.

Delivery Requests
The procedure for Turmeric delivery is based on the contract During three trading days prior to expiry of the contract (including the date of expiry); sellers having open positions would be required to indicate delivery information for giving delivery. NCDEX would thereafter complete the matching process based on the location and by random, keeping in view the storage capacity of warehouse and Turmeric already deposited / dematerialized for delivery or any other factor(s) that the Exchange deems appropriate for completion of the matching process. It may be noted that upon expiry of the contract, if any seller having open position desires to give physical delivery at a specified delivery center, then the buyer with corresponding open position as matched by the process put in place by the Exchange, shall be bound to settle by taking physical delivery. All open positions of those sellers who do not 60

provide required information for physical delivery shall be settled in cash with penalties (only in contracts with sellers option to deliver) For Turmeric currently, the applicable penalty is .05 %of the Final Settlement Price.

Delivery Allocation
The Exchange would then compile delivery requests received from members on the last trading day, as specified in Chapter 1 above. The buyers / sellers who have to receive / give delivery would be notified on the same day after the close of trading hours. Delivery of Turmeric is to be accepted by buyers at the accredited warehouse where the seller affects delivery in accordance with the contract specifications.

Actual Delivery
Where Turmeric is sold for delivery in a specified month, the seller must have requisite electronic credit of such Turmeric holding in his Clearing Members Pool Account before the scheduled date of pay in. On settlement the buyers Clearing Members Pool Account would be credited with the said delivery quantity on pay out. The Clearing Member is expected to transfer the same to the buyers depository account. However, the buyer must take actual physical delivery of Turmeric before expiry of the validity date as indicated in the quality test report/Assayers Certificate of the Assayer or get the same revalidated.

Accredited Warehouse
NCDEX has accredited warehouses for receipt and delivery of Turmeric. Turmeric will be received and delivered only from the NCDEX accredited warehouse.

Quality Standards
The contract grade for delivery of Turmeric futures contracts made under NCDEX Regulations shall be Turmeric confirming to the quality specification .Delivery of higher grade would be accepted.

Packaging
61

Turmeric delivered shall be packed in un-mended B-Twill bags of accepted industry standard material and in merchantable condition with no spilling of contents and with the mouth of the bag stitched disallowing sweating / spilling. The packaging of Turmeric should be in standard bags of 70 Kg Net.

Standard Allowances
Sample weight per validation of quality allowed will be 0.2% on account of sample testing.

At the time of deposit

The quantity credited will be the actual quantity delivered at the tested moisture level, after providing for standard allowances on account of sampling.

At the time of withdrawal / revalidation

The weight of lot delivered / revalidated at the time of withdrawal / revalidation shall be adjusted to moisture level at the time of deposit / revalidation whichever is later and such adjustment shall be over and above the standard allowances mentioned above.

Weight
The quantity of Turmeric received and / or delivered at the NCDEX designated warehouse would be determined / calculated by the weighbridge / weigh scale at the premises of the designated warehouse and the quantity so determined would be binding on all parties. The weight of the bag will be 70 Kg Net.

Good / Bad delivery Norms

Turmeric delivery into NCDEX designated warehouse would constitute either good delivery or bad delivery based on the good / bad delivery norms as per Exhibit 3. The list contained in Exhibit 3 is only illustrative and not exhaustive. NCDEX would from time to time review and update the good & bad delivery norms retaining the trade / industry practices.

62

Turmeric Sampling
The sampling will be done with 10% of bags. Each of these bags will be emptied and then samples will be drawn from different parts. This is then mixed to form a composite mixture of 2 Kgs. The composite mixture is then divided into 4 parts These samples will be distributed as under: One sample to Depositor One sample to Warehouse owner One sample for Analysis by assayer One sample for record with assayer

Accredited Assayer
NCDEX has approved the Assayer for quality testing and certification of Turmeric received at the designated warehouse. The quality testing and certification of Turmeric will be undertaken only by the approved Assayer

Quality Testing Report

The test report issued by the Turmeric testing laboratory on the samples drawn shall be acceptable and binding on all parties.

Testing Procedure
Testing for Turmeric will be done both physically and chemically. To test moisture chemical test by done by distillation method.

Assayer Certificate
Testing and quality certificate issued by NCDEX approved Assayer for Turmeric delivered at designated warehouse in Nizamabad and at such other locations announced by the Exchange from time to time shall be acceptable and binding on all parties. Each delivery of Turmeric at the warehouse must be accompanied by a certificate from NCDEX approved Assayer

Validity period
The validity period of the Assayers Certificate for Turmeric is will be as mentioned below 63

Month of Deposit January to July August September October November December

Validity of Certificate 3 months 3 months 3 months 3 months 2 months 1 month

Revalidations allowed One revalidation for 3 Months allowed One revalidation for 2 Months allowed One revalidation for 1 Months allowed revalidation not allowed revalidation not allowed revalidation not allowed

Electronic transfer
Any buyer or seller receiving and or effecting Turmeric delivery would have to open a depository account with an NCDEX empanelled Depository Participant (DP) to hold the Turmeric in electronic form. On settlement, the buyer account with the DP would be credited with the quantity of Turmeric received and seller account would be debited. The Buyer wanting to take physical delivery of the Turmeric holding has to make a request to the DP in prescribed form, with whom depository account has been opened. The DP would route the request to the warehouse who would issue the physical commodity i.e.: Turmeric to the buyer and debit his account, thus reducing the electronic balance to the extent of Turmeric rematerialized.

Charges
All charges and costs payable at the designated warehouse towards delivery of Turmeric including sampling, grading, weighing, handling charges, storage etc. from the date of receipt into designated warehouse unto date of pay in & settlement shall be paid by the seller. No refund for warehouse charges paid by the seller for full validity period shall be given to the seller or buyer for delivery earlier than the validity period. All charges and costs associated & including storage, handling etc. after the pay out shall be borne by the buyer. Warehouse storage charges will be charged to the member / client by the respective Depository Participant. The Assayer charges for testing and quality certification should be paid to the Assayer directly at the delivery location either by cash / cheque / demand draft. 64

Duties & levies

All duties, levies etc. up to the point of sale will have to be fully borne by the seller and shall be paid to the concerned authority. All related documentation should be completed before delivery of Turmeric into the NCDEX accredited warehouse.

Stamp Duty
Stamp duty is payable on all contract notes issued as may be applicable in the State from where the contract note is issued or State in which such contract note is received by the client.

Taxes Service tax

Service tax will be payable by the members of Commodity Exchanges on the gross amount charged by them from their clients on account of dealing in commodities.

Sales Tax / VAT

Local taxes/ VAT wherever applicable is to be paid by the seller to the sales tax/VAT authorities on all contracts resulting in delivery. Accordingly the buyer will have to pay the taxes/VAT to the seller at the time of settlement. Members and / or their constituents requiring receiving or delivering Turmeric should register with the relevant tax/VAT authorities of the place where the delivery is proposed to be received / given. In the event of sales tax exemption, such exemption certificate should be submitted before settlement of the obligation. There will be no exemptions on account of resale or second sale in VAT regime.

Premium / Discount
Premium & Discount on the Turmeric delivered will be provided by the Exchange on the

65

basis of quality specifications: The Exchange will communicate the premium / discounts amount applicable. Such amount will be adjusted to the members account through the supplementary settlement.

66

RESULTS AND FINDINGS

AGE GROUP OF RESPONDENTS:
In this segment we will be looking to the individuals. The survey has covered the market yard, Hinjewadi, Magarpatta, Pashan, FC road, Sinhagad road, Deccan area and respondents such as IT professionals, software engineers, doctors, C.A., businessmen, industrialists, agriculture producers and others. The respondents covered in the survey were distributed across different age groups. The different categories according to age group and number covered are as follows: Here we found that 47% of the respondents were belonging to age group of 25-30 years, while 8% respondents were belonging to age group of 36-40 years. 20% were belonging to age group of 31-35 years, 9% respondents were less than 25 years, and 16% were belonging to age group of 41-45 yrs respectively. Only 0%of the respondents were belonging to the age group of more than 45 yrs. We have found in our survey that although the older generation is more experienced in their business and many things can be discussed with them but when it comes to entering into new field of business, they are quite reluctant as compare to younger generation. Risk taking ability in 25-30 age groups is more. So age although is not a very important factor but when comes the point of finding new or potential customers then age plays a vital role. Because any type of campaigning or demonstration is successful, only when it reaches to right type of customer.

67

AGE GROUPS
16% 8% 0% 9% <25 25-30 31-35 36-40 20% 47% 41-45 >45

68

INCOME CLASSIFICATION
Annual income of any person directly influences his business. The respondents covered in the survey were of different income level. It is found that most of the respondents (59%) were from income level of 2.6 to 5 lakhs. They take more interest in investing their money to get return from it. Survey was taken on the basis of income of respondents. It was found that 59% respondents belong to the annual income of 2.6 to 5 lakhs, 17% respondents belong to annual income of 1.5-2.5 lakes, 24% respondents belong to annual income of more than 5 lakes, and only 0% respondents belong to annual income of less than 1.5 lakes.

INCOME LEVEL

24%

0%

17%

<1.5 1.5-2.5 2.6-5 >5

59%

OCCUPATION
Survey were taken from different professionals like doctors, software engineers, chartered accountants, contractors, retired persons, sales officers, businessmen, etc. doctors and software engineers are as follows : 17%, percentage of chartered accountant and traders are 17%, percentage of manager is 7%, percentage of businessmen is 19%, percentage of contractor is, retired, sales officer and students are 2%, and percentage of accountant is 1% only. 69

OCCUPATION RETIRED CHARTERED ACCOUNTANT BUSINESS MAN HARDWARE ENGINEER MANAGER SOFTWARE ENGINEER SALES OFFICER CONTRACTOR DOCTORS LIC AGENT TRADER

NUMBER OF RESPONDENTS 2 26 30 2 11 35 1 1 19 1 26

PERCENT 1 17 19 1 7 23 1 1 12 1 17

RETIRED CHARTERED ACCOUNTANT BUSINESS MAN

17% 1% 12% 1% 1% 23%

1%

17%

HARDWARE ENGINEER MANAGER SOFTWARE ENGINEER SALES OFFICER CONTRACTOR

19% 1% 7%

DOCTORS LIC AGENT TRADER

70

GENDER:
Survey was taken on investment awareness programe according to gender. It was found that 96% of respondents were male and 4% of respondents were female.

Male Female ratio

2% Male Female 98%

INVESTMENT:
Survey was taken from Doctors, Engineers, Traders, C.A., Students e.t.c. on the basis of whether they are investing in equity market, commodities market or, not. It was found that 76% respondents are investing in equity market or, in commodities market and 24% respondents are not investing anywhere.

71

Incomewise classification of Investors

80 60 No. of respondents 40 20 0 24 16 66

0 < 1.5 1.6 - 2.5 2.6 - 5 >5 Income of the respondents (In Lakhs

INVESTMENT SUBJECT
Survey was taken on investment awareness programme on the basis of investment in different sectors like stock market, mutual fund, fixed deposit, commodities market, real estate and insurance. It was found that 44% respondents are investing in stock market, 13% respondents are investing in mutual fund, 9% are investing in insurance, 19% respondents are investing in fixed deposit, 3% respondents are investing in real estate and only 12% are investing in commodities market.

INVESTMENTS
STOCK MARKET MUTUAL FUND
9% 12% 3%

FIXED DEPOSIT
44%

COMMODITIES
19% 13%

INSURANCE REAL ESTATE

72

AWARENESS ABOUT KARVY:

Survey was taken from different areas of Pune city on the basis of awareness about Karvy commodities broking limited. From the survey it is found that only 38% respondents are aware about it and 62% respondents are not aware about it. AWARENESS ABOUT KARVY

38% 62%

YES NO

OTHERS:
INTEREST IN COMMODITIES AWARENESS PROGRAMME

INTERESTED IN COMMODITY AWARENESS PROGRAMME OR NOT

25% YES NO 75%

HEDGING AWARENESS

73

HEDGING AWARENESS
7% YES NO 93%

OCCUPATION VS INTEREST IN COMMODITY AWARENESS PROGRAMME: Survey was conducted on the basis of occupation of people and interest in commodities awareness programme. People of different occupation showed their interest in commodities awareness programme differently. BUSINESSMEN: 3% respondents are interested in commodities awareness programme. CHARTERED ACCOUNTANT: 1% respondents are interested in commodities awareness programme. CONTRACTOR: 0% respondents are interested in commodities awareness programme. DOCTORS: 21% respondents are interested in commodities awareness programme. HARDWARE ENGINEERS: 0% respondents are interested in commodities awareness programme. MANAGER: 13% respondents are interested in commodities awareness programme. RETIRED: 0% respondents are interested in commodities awareness programme. SALES: 100% respondents are interested in commodities awareness programme. SOFTWARE ENGINEER: 32% respondents are interested in commodities awareness programme. TRADERS: 18% respondents are interested in commodities awareness programme.
no. of respondents interested No. 1 Type of occupation Traders commodities 7 In

74

2 3 4 5 6 7 8 9 10 11

Software Eng. Businessmen Contractors C. A s Doctors Hardware Eng. LIC Agent Manager Retired Sales

13 4 0 1 8 0 0 5 0 1

Occupationwise classification of the responses

15

No. of responses

10 5 0 1 2 3 4 5 6 7 8 9 10 11

Occupation No.

AGE GROUP VS AWARENESS ABOUT INTEREST IN COMMODITY AWARENESS PROGRAMME Survey was conducted on the basis of age of people and interest in commodities awareness programme. It is found that people of different age group have different interest in commodity awareness programme. Less than 25 years: 40% respondents are interested in commodities awareness programme. 25 TO 30 YEAR: 31%respondents are interested in commodities awareness programme. 31 TO 35 YEARS: 21% respondents are interested in commodities awareness programme. 75

36 TO 40 YEARS: 3% respondents are interested in commodities awareness programme. 41 TO 45 YEARS: 5% respondents are interested in commodities awareness programme. MORE THAN 45 YEARS: 0% respondents are interested in commodities awareness programme.

76

Age Group

no. of respondents interested In commodities

< 25 25 - 30 31 - 35 36 - 40 41 - 45 > 45

16 12 8 1 2 0

Classification of the respondents according to the age groups

16 14 12 No. of respondents 10 8 6 4 2 0 < 25 25 - 30 31 - 35 36 - 40 41 - 45 Age Group 1 2 0 > 45 16 12 8

INCOME VS INTEREST IN COMMODITY AWARENESS PROGRAMME: Survey was taken on the basis of income of the people and interest in commodity awareness programme. It is found that people of different income show their interest differently in commodities awareness programme. LESS THAN 1.5 LAKHS: 0% respondents are not interested in commodities awareness programme. 1.5 TO 2.5 LAKHS: 23% respondents are interested in commodities awareness programme. 77

2.6 TO 5.0 LAKHS: 62% respondents are interested in commodities awareness programme. MORE THAN 5 LAKHS: 15% respondents are interested in commodities awareness programme.

Income level < 1.5 1.6 - 2.5 2.6 - 5 >5

no. of respondents interested In investment 0 24 66 16

Incomewise classification of Investors

80 60 No. of respondents 40 20 0 24 16 66

0 < 1.5 1.6 - 2.5 2.6 - 5 >5 Incom e of the respondents (In Lakhs

78

SUGGESTIONS AND RECOMMENDATIONS

Introduction of Commodity Bond: the concept is very much similar to mutual funds; traders can take money from common people at a certain fixed rate of interest and can invest in commodities trading. In return the trader will pay the investors their interest irrespective of the making of profit or, loss. But in this case there should be some regulatory body (like SEBI for corporate bonds) to supervise that the money is put only in commodities trading and the investors are paid their part of return. Financial support from banks: Banks should come forward to grant loans for trading in future markets against pledging the commodity. Feedback and complaint redressal mechanism: A proper feedback mechanism and grievance redressal mechanism is very much essential for proper functioning of the commodity system Karvy comtrade should develop a proper feedback mechanism and information dissemination mechanism for its client. Awareness Building: Since trend of commodities future market is new trend in India, very less people are aware about it. Hence Karvy Comtrade should arrange for activities like organizing seminars on commodities market awareness, advertising through different media sources (campaigning in various exhibitions, outdoor advertisements, pamphlets distribution through newspapers and local agencies initially in some selected areas through test marketing). These commodity market. types of programs are essential for enhancing the awareness among the people, which ultimately will create interest among society and interested candidates in

79

Minimization of the brokerage charges:

To remain competitive in the market of

commodities Karvy comtrade has to compromise on its brokerage charges. In order to build a larger client database this step may prove to be very essential.

Strong security mechanism: A well build security mechanism for database is a core concern for a commodity trading business .In order to avoid scams breaching secure mechanisms Karvy comtrade should concentrate on building up of a well maintained and precede database of its clients as well as business operations.

80

BIBLIOGRAPHY

Books: Commodities and derivatives, volume 1.

Websites: www.mcxindia.com www.ncdex.com www.commodityindia.com www.commoditiescontrol.com 81

Questionnaire
INVESTMENT AWARENESS

I. Personal information: Name: Age : Gender: M Address: Contact No: Occupation: Annual Income: Less than 150000/150000 250000/250000 500000/Above 500000/II. Do you invest? Yes No 82 F

If yes: Stock Market Commodities Below 10% 10% - 30% 30% - 50% Above 50%

Mutual Fund Insurance

Fixed Deposits Real Estate

III. What percentage of your income do you invest?

IV. Whom do you consult for your investment? Charted accountant Broking Agencies Personal Financial Advisors Others V. Do you know any brokerage firms; are you client of any of these? A). Karvy B) Sharekhan C) India Infoline D) Indiabulls E) ICICI Direct

VI. Are you interested in getting associated with investment awareness programmes? Yes No

Signature.. E-mail id..

83